8/27 Deadline – AZ Tax Credits losing Federal tax deduction!

August 27, 2018 - 2 minutes read

Arizona Charitable Tax Credits may no longer be deductible for Federal taxes if made after August 27, 2018.

Under proposed regulations issued by the IRS on Thursday, August 23rd, transfers to a state agency or charitable organization in lieu of paying state and local taxes would not be deductible as a charitable contribution to the extent that the taxpayer received a quid pro quo tax credit.

Previously most Arizona taxpayers could receive a $1 for $1 reduction on their Arizona tax while receiving a charitable tax deduction on their federal tax return. That strategy will no longer work for Arizona Tax eligible contributions made after August 27, 2018.

Contributions that result in a state or local tax credit in return for the contribution would not be deductible for federal tax purposes to the extent of the credit; however, contributions that result in a state or local tax deduction may be deductible for federal tax purposes.

If you want to take the Arizona tax credit and deduct them on your federal tax return this year, you’ll need to act fast!

The proposed regulations apply to taxpayers making contributions to state tax credit program created after the TCJA as well as preexisting state tax credit programs created before the TCJA. The regulations are proposed to apply to contributions after Aug. 27, 2018.

Important Arizona Tax Credit Links Below:

Charitable & Foster Tax Credit Programs  & Qualified Organizations

Public School Tax Credits

Private School & Certified Student Tuition Organizations (STO)

Arizona Military Family